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Cosmo First Ltd
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Good day, and welcome to the Investor Call of Cosmo First Limited to discuss the Q4 and FY '24 results. Today, we have with us from the management, Group CEO, Mr. Pankaj Poddar; and Group CFO, Mr. Neeraj Jain.
Starting off with the statutory declaration, certain statements in the conference call may be forward looking. These statements are based on management's current expectations and are subject to uncertainties and changes in circumstances. These statements are not guarantees of future results.
[Operator Instructions] Please note that this conference is being recorded. Now may I request Mr. Neeraj Jain to take us through his opening remarks, subsequent to which we can open the floor for the Q&A. Thank you, and over to you, Neeraj Ji.
Very good afternoon, ladies and gentlemen. I'm Neeraj Jain, Group CFO at Cosmo First, along with my colleague, Mr. Pankaj Poddar, Group CEO at Cosmo First. Our financial results for March '24 quarter and investor presentation, both are available in company's website. We will first discuss brief on the performance of the company for the March '24 quarter, which may be followed by questions.
Frist talking about the financial results. Consolidated sales for March '24 quarter is INR 641 crores, which is higher by 3% compared to December '23 quarter, which is banned yearly by the higher volumes. The EBITDA for the quarter reached INR 67 crores as against INR 56 crores during the previous quarter. So during March '24 quarters, the improvement in EBITDA, primarily for two factors: higher specialty sales and improvement in domestic BOPP fund margin effective March '24.
The specialty sales has increased to 66% of total volume in quarter 4 compared to 64% for the full year [ FY '22 ] and 61% in December '23 quarter. It may be noted that even in such a challenging scenario, the company's specialty margin broadly impact in line with the last year, except for some sales mix change impact uneven orders from the specialty export customer, which has high margins. We are glad to advise that these orders are now received by the company from quarter 1 FY '25.
BOPP film margin has been running at INR 12 per kg during March '24 quarter versus INR 9 per kg in December '23 quarter. The industry margin for the BOPET film, which is close to 8% of our top line continue to be remain in negative. For BOPET film what we are going to focus now is to be selective in terms of the volume. So we will first rationalize the volume to reduce on the loss-making sales and focus more and more on the specialty film and strengthen sales.
It will also be noted that if we separate out the new vertical performance, which include these specialty chemicals, BOPET, Petcare and rigid packaging, the BOPP sale EBITDA for quarter 4 was 11.6% as against reported EBITDA of 10.5%.
Moving to outlook. So quarter 1 FY '25 outlook for BOPP margins remained steady, in line with the March '24 month approval, further the company's expected improved sales of specialty BOPP film as well as some rationalization in costs. First specialization on renewable power should add to the bottom line starting from April 2024. We expect annual impact to be close to INR 25 crore.
Another core specialization related to shifting both Korea plant to India is moving as per plan. Both relocation to India, this production line should rationalize the cost by close to $1 million with improved capacity utilization of the line. We expect this line to start commencement of operation in India from quarter 2 FY '25.
Now I will move to Specialty Chemicals. So during March '24 quarters with Specialty Chemicals subsidiary EBITDA has improved for 2 primary reasons: one is better realization of specialty chemical coatings and some refinement in quarter. So in quarter 4, EBITDA for the Specialty Chemical was close to 15%. What we've seen now is the specialty chemical subsidiary is all said to make double-digit EBITDA next year in FY '25 with more than 20% ROCE.
Moving to corporate additional things, so the board has recommended a dividend of INR 3 per share. Beside this, during the quarter, the company's credit rating has been reaffirmed by CRISIL as AA minus with a stable outlook.
Moving to packaging growth projects. We started 2 new business vertical related to packaging in previous quarter, in December '23 quarters. First, metallized capacitor film, sorry I'll repeat metallized capacitor film, which will serve the electronic industry and rigid packaging, which is largely serve the FMCG industry.
Both are moving and working well as per plan even for metallizer we have reached close to 2/3 capacity utilization in quarter 4. Work on our BOPP and CPP lines are progressing in line with the plan. Both the lines will be world's largest production capacity line and will increase company's production capacity by close to 50% in a sales manner over next 12 to 15 months. With these high-speed lines, it should rationale cost of production between 3% to 5% depending on the product.
Now I will move to petcare division, Zigly. So for Zigly, our focus for FY '25 is going to be same-store sales growth, with current monthly GMV from Zigly reached INR 4.5 crores, largely on the back of the retail footprint of 23 stores and increased online sales. EBITDA loss from Zigly for the full year is INR 24 crores in FY '24. Zigly is progressing now, I think, and developing the IT structure, making it future ready for harnessing the exponential growth of the petcare industry in India.
Now we instinctively move to growth and demand there is label of the company. We are looking for close to INR 300 crores to INR 350 crores of BOPP CapEx in the next one year, which will be largely on BOPP production level. The financials remains strong. The company's net debt stand at INR 561 crores, which is 2.2x to EBITDA and 0.4x to equity. We expect net debt reduction to start from FY '26 onwards.
So with this, I will take a pause here and we would like to open the call for the questions, please.
[Operator Instructions] The first question is from the line of Amit Aggarwal from Leeway Investments.
Asking about the rigid packaging, how much revenue we generated out of rigid packaging in this quarter? And what is the current monthly run rate?
So we are not sure, your question is about rigid packaging revenue number, is it?
Yes, rigid packaging. How much turnover we achieved in last quarter? And how much of it is run rate of this quarter?
So, rigid, we just started in the quarter 3 and last quarter, quarter 4, we are close to INR 15 crores of the sales.
And how much are we expecting to achieve in this year? Hello?
Sorry, say again, please.
How much turnover we're expecting in terms of rigid packaging this year?
[ So we see ] -- I mean, as we indicated earlier, at full capacity utilization, it should generate close to INR 125 crores of the sales. The utilization of the capacity is increasing month-on-month. So we expect from the second half of the FY '25, we should be close to 80% capacity utilization.
And my last question is regarding Petcare business. So what is the growth rate right now for same-store sales?
I'm sorry, you need to say again, your voice is not very clear.
This is regarding your Zigly business, what is the growth rate of same-store sales for Zigly?
So in Zigly last year, FY '24, we have grown close to 40%.
I'm talking about the same-store sales, sir.
So that is also growing in line with these broader numbers.
And do we expect to close on some stores, which are not doing well or are all these are doing it very well as per the expectations?
Sorry, I'm not able to understand fully your question.
I'm asking do you think any of the stores is supposed to shut down because the sales are not as per the expectation? Or all the stores are doing very well?
Say, if you look at it broadly, we have opened 23 stores, there may be a possible one of the store may lead to shutdown and reopen again at different locations. But that is part and parcel of the overall plan. But as such, the sales is growing. You can see in the number, as we indicated in the GMV, we have reached INR 4.5 crores monthly. And we started GMV close to INR 3 crores of GMV. So that growth is coming [indiscernible].
And my last question is regarding the Zigly, only. Do we achieve both turnout from health care or it's just -- we just achieved the turnout from the product sales?
My question is regarding vet business, are we doing the [ vet ] business?
The vet business is also growing. So they've increased focus in the retail space, where we are going to focus more on these services, including vet.
The next question is from the line of Kevin Gandhi from CapGrow Capital Advisors.
Yes. So basically, I had a few questions. First question was on the Petcare business. So what is the current store economics of the business? And how do we see our Petcare business being profitable?
And so basically -- okay, so one more part of the question was, by the year-end FY '24, we were assessing around INR 30 crores of losses at the EBITDA level. And now we have almost achieved INR 24 crores. So are you seeing an increase in the EBITDA being positive for any of the stores or for the business as a whole? So that's my question on the Petcare business.
Secondly, on the basic BOPP business, what is the trend of the spreads right now in the base film business and how do we see getting back to the INR 40 per kg [ suite ], as we had achieved in March 2022. So how do we see that actually coming?
In time, we'll be able to gather them. Request if you can ask one question at a time.
Sir, my first question was on the Petcare business. So basically, how do we see the store economics right now? And what is the framework? What's the path ahead of the Petcare business to turn profitable in the coming 2 years? That's my first question.
The stores which are more than one year old, they are moving towards profitability. They are not profitable, but they're moving in that direction. What we could see is that their month-on-month sales is improving, and it's a matter of time before some of them, if not all of them, will become profitable.
As far as we grow to profitability for review overall, unless we start touching INR 150 crores, INR 200 crores, profitability would not come. What we are certainly trying is that let first some stores start becoming profitable. Online business is even more difficult to be profitable, if we continue to sell brands of other companies. Therefore, our focus is on launching home brands, where the gross margins are more. That is a process we have just started. And we expect that within the next 12 months, we will launch lot of home brands.
So to be profitable, unless we achieve a decent scale, profitability will take some time.
Okay. And sir, how much is the proportion of the online sales and the stores? So basically, the online and the offline part.
So, roughly 70% sales is retail and 30% sales is online. We do not want to push online sales too much, though it's not a very difficult task for us. But intentionally, we are not pushing it because till the time we do not have our own private label or house brands, it may not be a great idea to scale it up.
So what we are actually -- online business right now is more from a data acquisition perspective and our analytics perspective in terms of [indiscernible] and so on and so forth. So right now, it's more of a data acquisition strategy. And once we start launching our own house brand, then is the time and we'll start scaling it up much more aggressively.
And sir, 2 years down the line, are you seeing any private equity [ infusion ] for us to expand the business on a further scale?
These are things which nothing has been accepted at this stage. Obviously, we are here for a long term. So I don't think we can answer this question.
Sir, my next question was on the [ base ] film business. So right now, as you can see, the spreads have increased from INR 9 to INR 12 per kg. How do we see this trend over one year or like more than one year. So basically March 2022, we were at the top of the spreads around INR 40 per kg. How do we see that traction coming? And so what's the current scenario? Are there any factories being shut? Or are there any new capacities coming? So any brief idea on the same would be helpful.
In BOPP, the demand growth is quite good. And there are no new players coming up in the next 2, 3 quarters. So it's by logic, I believe the margin should go up. However, it's anybody's guess, nobody can project that.
When it comes to polyester, Polyesters margins are still in a very difficult terrain. Right now, even at a contribution level or a gross margin level Polyester continues to net losses.
The next question is from the line of Jatin Damania from Swan Investments.
Just wanted to understand on your specialty business, as in the last couple of calls, we have always been maintained that our margin in our contribution to the specialty business remains steady state and don't see much volatility. But when you compare with the FY '23 number, for the full year basis, the contribution margin for the stability has declined substantially. So what was the main reason behind that?
Yes. See, there are 3 categories we have, specialty, semi specialty and commodity. When you talk about specialty, the margins are intact, there could be very minor plus or minus, because of mix change within specialty.
Semi-specialty, we've always said that they are tied to the commodity margins. They are always on a delta over commodity, but their margins will go up and down with the market. So right now, the change that you see is largely because of semi-specialty and commodity margins.
No. But sir, if you look at in your presentation on Slide 7 and if I look at the FY '23 number, the specialty margin contribution remained at INR 70 in FY '23. But otherwise same has come down to almost [ INR 55 ] so I was unable to understand why such a steep fall when our mix and volume and speciality is going up year-on-year?
Actually this is one category of films that we've explained earlier, where business was not happening, but the good news is that it has started to happen from quarter 1 of this year. These are minor change, and this will also get better in the coming quarters.
So what was the contribution of that particular claim in FY '23 and how much it dropped in FY '24?
There was no volume for that till last year or a very insignificant volume. It will go back to the original volume and the margins will go up because of that.
So from the first quarter of FY '25, we'll start seeing the contribution of that film to start kicking in, right?
Yes. The specialty margins will go up.
So then again, it will be back to the normal range of INR 65, INR 70 which is [indiscernible].
Yes.
And sir, secondly, for the growth project, we will be spending there about INR 300 crores, INR 350 crores of the CapEx in FY '25 so post the completion of the entire CapEx, what will be our net debt figure?
You're asking net debt?
Yes. Post our expansion on of INR 350 crores that will be completed in FY '25. So end of FY '25, what will be a our big debt?
You see, currently we are at INR 560 crores of net debt. So here, we do not expect much change in the net debt level except that there maybe increase INR 20 crores, INR 30 crores, INR 50 crores. That will be clearing at the end of the March '25.
From [ their hole ], as we indicated earlier on the con call you may expect some reduction in the [ next term ].
And sir, last question. Just wanted to understand, see, on the BOPP we are doing, I mean, definitely the scenario has improved from what it was last quarter. Specialty, we'll see an improvement starting from the first quarter because of the new trends kicking in, and we are also planning to launch uncontrolled payment and many other [ plans ]. But when you look at our entire ROCE, because of the Petcare business, there is a substantial drag in our retail issues' performance. So as a company, what is your take on Petcare, are we looking in some sort of demerger or the some sort of restructuring in the Petcare business or the entire business model to...
See, there are two parts to your question. One is on the ROCE. ROCE, if you look at there's still significant part of the CapEx, which is in the CWIP, which means that part of the CapEx is not earning anything. So I'm sure once that CapEx commence the operation, the ROCE profile of the company will increase.
With respect to your second part of your question, which is health care, health care the investment size is not that significant. So of course, OpEx is more CapEx is lower in Petcare business. But as we announced today morning to stock exchanges, we have initiated the process of having the pet care venture in a separate structure.
So I mean are we looking at funding the separate subsidiary? I mean, additional funding for FY '25, '26, or probably we'll be looking at the investment from the outside? I mean I just wanted to understand that the Cosmo First will continue to support the cash flow to the Petcare business because they will be continue to making loss till the time the revenue of INR 150 crores, INR 200 crores doesn't range?
You see, as of now, the [ TAM ] is not [ one ] down. So we have just initiated the process in the form of having a sector subsidiary in place, which will have in future, the Petcare business. So with the time, definitely, we will announce further.
The next question is from the line of [ Ketan Chedda ], an Individual Investor.
My first question is with respect to the gross margins. If you compare the data of 2019 versus FY '24. Our volumes for the specialty and semi-specialty has increased significantly. And even for individual categories, you have shown, our spreads are better in FY '24 as compared to FY '19.
Now with this movement in the specialty and semi-specialty contribution increasing in the overall mix we will expect the EBITDA margins to improve. Your gross margins are better, but your EBITDA margins have not improved even on a stand-alone basis, that's the case when [ I make up ] results. So could you explain why is this happening? Why our EBITDA margins are not improving as compared to FY '19 levels?
It depends on many factors, actually. First is what is going to be the raw material price because that primarily determine the sales in terms of the value. Very clearly [ give ] a big margin in these specialties, but you need to see, it will be compared for the company as a whole, you need to see what is the performance of the formality part of business as well because, of course, the EBITDA margin improved both the specialty as well as the formality, while I do not have ready numbers compared to FY '19 for you to discuss. But you need to look at the comprehensive and then we can always have a chat.
And sir, I'll reach out to you all for this clarification. My second question is with respect to the Zigly business. In your presentation, you mentioned about the demerging of the business at two different slides. But on one side, you mentioned it will be in short term and the other side is mentioned in the medium term. So there's a confusion. What clarification I'm seeking is, do you have some sort of a time frame, a tentative time frame, that are very, very definitive, like maybe like 2 years down the line or 3 years down the line, you will [indiscernible] in a different, you'll demerge the business.
So as we announced the stock exchanges today, we have today initiated the process by incorporation of a separate subsidiary for, which will have the Petcare venture in the future. But that time frame is not yet finalized. As in when it gets finalized, definitely we will inform the stock exchanging of...
And my third question is with respect to the margins of the specialty chemicals. Now your Specialty Chemical margins are very, very low currently. So any future outlook you could provide that like by when they -- we can expect the margins to improve further, like it will take how long and to what level should we expect the margins to reach?
You see, as we said at the beginning of the call, there was very specific specialty orders, which have not come in FY '24. That's why you see a change in the spreadsheet overall margin. Although if you look at it fee wise, that change is not there.
[indiscernible] beginning of the FY '25 quarter 1, we have started getting those orders again, which we definitely have positive impact only in FY '25.
Sorry, my question was on specialty chemicals. You have shown in your results the Specialty Chemicals have a separate segment. So my question was more with respect to the Chemicals and not with the respect to sales. I'm assuming that sales would be covered in the other category.
Specialty chemicals, few things has happened. One is better realization of the coating chemicals and secondly, the companies could work on better recipes for some of specialty chemicals, which is working well in terms of [indiscernible]. So these 2 things taken together was highly impact -- auditing impact on the EBITDA. As we said in our commentary for FY '25, we expect this enhanced level of EBITDA to continue for the Specialty Chemicals [ consumer ].
The next question is from the line of Vipul Kumar Anopchand Shah from Sumangal Investment.
Could you break down your 64% sales of specialty and semi-specialty? How much is specialty and how much is semi-specialty?
Roughly 50-50%. That's right.
And sir, regarding Zigly, how much more support we will have to give that venture till it is demerged and till it becomes self-sufficient. Any figure you can spell out so that it gives clarity to the investors.
It's difficult to say at this stage as the demerger may happen within the next couple of years. But as far as financial support is confirmed, the [indiscernible] will require money for next at least 2 to 3 years until it starts becoming profitable. So how much is that is very difficult to say because we are continuously monitoring.
The good thing is that there is a lot of focus that we are putting on same-store sales growth as well as try to see how we can be more frugal. So we are hoping that some of our losses should start coming down from quarter 1 in this business, while we will see even more growth in the retail business. Online business, as I said earlier, we will take some more time to grow it because until the time we do not have enough private label, we would not like to grow online business to a much larger extent.
So CapEx and OpEx, at least for FY '25 for [ ADV ] business, can you give any indication what will be in that figure, sir?
It should be close to [indiscernible] I think, close to INR 30 crores, INR 35 crores this year. And plus EBITDA loss guidance should be same as last year of INR 24 crores? Or it should come down substantially. On a higher sales, we should be doing similar losses.
Similar loss?
INR 30 crores, INR 35 crores of fee proposed investment includes the EBITDA loss. [indiscernible] number, I mean these numbers are still small, these are [indiscernible] our operations, and we will be creating a lot of value for our shareholders in the years to come.
The next question is from the line of Kevin Gandhi from CapGrow Capital Advisors LLP.
Sir, I just had this question that how much is the gross margin or gross profit that we are generating for the Zigly business? And how much do you think is expected for the coming 2 years? Any rough guidance would be helpful.
Zigly, as far as retail is concerned, our margins are constantly getting better, especially because our incentives on services is very high. In the recent months, we have started clocking 50% plus as soon as the gross margin in retail is concerned, what we really need to continuously work upon is to increase the retail sales and take more wallet share from our customers.
When it comes to online, our gross margins are hovering between 10% to 15%. And as I said earlier that in the time, we do not have our private [ payables ], this margin is not expected to go up significantly. But within 12 months, we are planning to launch a lot of our home brands.
And like approx sales estimate for the next two years, FY '25, '26, positively?
I feel like -- I'm going to say difficult to predict these numbers. But GMV basis in two years, we should exceed INR 100 crores at least.
On a full year basis? Okay.
The next question comes from the line of Deepak Malhotra from CapGrow Capital Advisors.
You talk about basically the spread rising up in this particular quarter.
Sorry to interrupt, the line for you is sounding muffled. I request you to please use the handset more.
Is it better now?
Much better. So please go ahead.
I think if we look at the trends in the industry, I think you already mentioned about a rise in the margins in the spreads. And plus other positive development is also the specialty, it's still going up to 66% of the total, which, in the past, you had mentioned that hovered even above 70% or going down to 57% on a monthly basis. But when we look at the overall perspective, you have also earlier indicated about a higher -- over capacity in the polyester film, but a less overcapacity in the BOPP business.
So my question primarily is, I mean, this time, the trough has gone for probably a little longer than what it has in the earlier cycles. So do we really see any true green shoots really emerging? Or is it kind of just a fall segment?
See, 2 things. As far as the specialty is concerned, only in 1 quarter, we touched 70%, which is a peak for us. And then what we realized is part of it was more stock bought by our customers and immediately next quarter, our numbers fell down. But on a sustained basis, what we see is that though FY '22 is looking at 64%, but maybe because of stock higher stock bought by our customers, the realistic number was more towards 60%. So from 60%, we grew to 62% because next year also, we saw a lot of stock corrections. And '24 we'd grew to 64%. And this year, we are hoping that we will be somewhere close to 68% to 70%.
Coming back to your second question, BOPP situation is continuously getting better. Having said that, there are a few lines which will come up from middle of next year. We do hope that some better sense in prevailing some companies either forcibly because of cash flow situation or even otherwise, will defer their line.
As far as polyester is concerned, I feel that this difficult journey will continue for at least 18 months. Having said that, our focus on polyester is to underline only with the products where we at least breakeven at EBITDA level. So we are focused to run to try and see that how we can start making money even in the polyester segment.
Yes. When you look at international players like [indiscernible], [indiscernible] Super Holding, some of the other Chinese players, all this also today has an effect on what's happening domestically. So how do you [ REIT ] any capacity expansions or any plants getting closed on that front, please?
Nobody can give that. All I can tell you is when we monitor the situation of some of the -- I mean, we have seen a lot of consolidation in South America. We have seen a lot of consolidation in Europe. We have hardly seen any consolidation in India, though, what we have seen is that there were some small stake sales to appeal, but that was when the going was good. We have to really see the sustenance power of some of the commodity players. But it's very difficult to comment on this. What we are more focused here on our own business that how we can relate our business more profitable by becoming more and more of a specialty business.
Another related question to the packaging business is the CapEx program, which you have undertaken because you have talked of a CapEx program, if we look in the last cycle of the last 2, 3 years is almost upwards of INR 900 crores out of which you have already completed the polyester film expansion and the CapEx is done there. Why you're still in the midst of, as you mentioned, the CapEx on the BOPP and the CPTP plant?
Plus you have the CapEx also on the Zigly business, Petcare business and also on the rigid packaging or specialty chemicals. So is my number of INR 900 crores plus is correct? Or the expenditure for rigid packaging and specialty chemicals is outside of that. That's a. And b, how does the debt repayment in...
1 question at a time, please. So see, we have done close to INR 1,000 crores CapEx and of which INR 700 crores, INR 650 crores to INR 700 crores has already happened. The suit for which will come in the coming years. What is left is only INR 300 crores to INR 350 crores. And after that, we don't have CapEx or even after this CapEx, our balance sheet still remains very strong.
Okay. And in terms of the debt repayment schedule, would you like to throw any light on this [indiscernible]?
Yes. So we've been paying our debt as per the schedule. So next year, we have close to INR 180 crores of debt repayment, which we do not see any concern in repaying that debt.
And my other question is on the Zigly business. In the earlier few calls, you have indicated about a larger CapEx going forward, where you also indicated of increasing your number of spent as to as much as 150 over the next 3 to 5 years. So where are we really in the cycle on that?
Zigly earlier we are increasing stores, this year also, we had communicated that will increase our stores from 23 to 40. These are initial years when we are making our business fundamentally very strong. And once we do that and see all these 150 would not be company-owned. Some of these would also be franchisee stores. And this year, if we talk about total investment in Zigly is expected to INR 30 crores to INR 35 crores, which is not such a big number from the overall size of the company.
The next question is from the line of Nikhil Chandak from JM Family Office.
My question though on Zigly was that, is the business ramp up slower than what you would have expected because you all know the size of the market is much, much larger and is also growing very fast, a lot of unorganized players like, for example, in a place like Mumbai, where I'm from, you find a lot of smaller companies now actually opening 3, 4, 5 stores and almost becoming like an organized player. So clears our pace of expansion slower than what we would have anticipated earlier?
Not really. What we want is that our pilots are very strong. So to be honest, until now, what we have seen is the stores, which are older than one year, they are moving towards profitability while the stores which are within one year are a bit far off from achieving profitability.
The other thing is when we started this business in vet care, our main focus was largely OPD services. However, what we have started doing is getting much deeper into vet services, which is helping the fundamentals of the business. What we are trying to do is to make sure that the so-called pilot is very strong before we start scaling up in a bigger way. And if you really see, we have been growing quarter-on-quarter. So I think what we have projected, we are largely in line, we want to make sure fundamentals are strong. And then once we are strong, we don't need to make sure that our own stores are profitable before we start doing [indiscernible]. We do not want to hasten up the process of getting franchises and let franchisee make losses. So what we are trying to make sure is that we have a model where profitability is relatively faster to achieve.
And when do you set up in West India, like in some of the larger metros in Western part?
Right now, our focus is on north and south. Once we complete our expansion in North and South, then we will come to west. But I'm happy to hear that our investors are excited to wait and see Zigly coming there. They're very happy to see.
We have done an acquisition of Petsy in the west region, and that's more online than offline. Their online presence in Petsy is still reasonably good.
Understood. And when you say vet services, would it mean like a clinic where you can take Pet, which is branded under the Zigly brand name and there will be doctors and staff out there?
Yes, absolutely. So what I said earlier was initially, it was just a primary OPD. But now we have started taking slightly more difficult cases of pets. So we are trying to build a complete ecosystem where we are able to provide veterinary with all kinds of diagnostic services. We also have grooming services, which are really world-class. And then we have a lot of products. Initially, all the products work from other suppliers.
But gradually, we are now building up our own private label, so we have already built up [indiscernible] where we have come out with [ bedding, floating, issues ], colors, harvesters and Zigly bowls, so on and so forth. Now the next in line is the biscuits which is about to get launched.
In between, we had also launched shampoos. So we are now in a stage where we are launching a lot of product lines and making them bigger because if this business has to really become profitable, then there is a lot of emphasis should be there on services as well as private labels.
My other question was in your opening remarks, you spoke about, I think, capacitor films I just wanted to understand what purpose does it serve? And is it something similar to what, for example, XPro India does? Is that the category?
Yes. So we will be more like a customer of XPro because XPro is making films, while we're adding value on the film.
So you'll buy the films from Xpro, for example?
From companies like Xpro. That's right.
And the end user tetra for this would be what, like in what segment and what?
Capacitors.
OKayo. So this could be a fairly high-growth segment, right, given what is happening in the broader space of electronic making and so on.
Cosmo has already established as a very good brand name within the industry because the kind of quality we have got to the market is quite superior. So customers are really liking it, and we are hoping that within next quarter, we should be fully utilizing our capacitor meeting a decent margin on the business.
What would be the top line for this business, for example, approximately on an annual basis?
Right now, we have not done a very significant CapEx. So at peak, we would be touching close to INR 60 crores, INR 70 crores annual revenue, INR 60 crores of annual revenue. But we would be scaling this business in the times to come.
The next question is from the line of Tushar Raghatate from Kamayakya Wealth Management Private Limited.
Just building on the earlier participant question. So there is a clear systemic in terms of margin, if we consider the FY '19 margin where the commodity share was having currently -- is totally the other way around. Just want to understand why that is so? And as you are seeing the green shoot in the BOPP segment, so do we -- are you forcing the FY '20 margins coming in FY '25, maybe FY '26?
For this one, I think it's a little difficult to pinpoint what will be the end tech margin in FY '25 with respect to the commodity part of the business. But from own logic, since we do not expect any new line to commence operation in FY '25 in BOPP. So from an industry logic, March margin -- March month margin should begin form May getting better.
It seems we don't need capacity in getting margin. But that is something with logic, you can say. But the impact is, if tomorrow some specific competitor come with a very aggressive pricing, it may then be visible in the overall pricing. So that's really difficult to give you more in specific amount.
Sir. You've given the target of increasing to 80% the specialty and the semi-specialty. So if I consider the delta, so it is the percentage contribution of that delta, which is from the specialty or the semi specialty, the major one?
See, what we are looking at is a high expansion of specialty fund. And within specialty also, we are trying to look at more aggressively for the high-end kind of this specialty so that overall margin profile improves not only in this specialty, given the [indiscernible] specialty also.
Commodity is partially in your hand -- I mean, it's not completely in hand. So next year, FY '25 focus is first going to be more and more sale of the specialties, particularly high on the specialties. Second, we are lot more focused on the cost personalization on which we took actually extent during the FY '24.
Now the results will get start steaming. As we said, close to INR 25 crores of the annual positive impact we see in the power cost in FY '25. And then besides this other cost specialization in terms of the thermal line shifting from the Korea to India and better utilization of the same rationalization of the base stagings. So although [indiscernible] are in pipeline. So more you can expect from [ cost ] in FY '21 in terms of the cost estimates.
Last my question, post this CWIP commercialization. So what sort of peak revenue are you seeing considering the mid-cycle realization...
You're talking about the BOPP realization.
I'm talking about the CWIP or the CapEx, which is undergoing. So post this [indiscernible] the CapEx is getting commercialized what sort of fees revenue are you foreseeing considering the mid-cycle realization in BOPP.
This is very broadly, you can say close to INR 1,000 crores of extra revenue that we have generated from the proposed BOPP line and CPP line taken together. And on the top it, the new verticals like the capacitor metallizer, rigid packaging, et cetera we are close to INR 200 crores additionally.
The next question is from the line of Rohan Patel from Trutle.
I had questions regarding uncontrolled chain, which you are going to release in [indiscernible] '25. Can you give me an idea of the capacity of this uncontrolled [ fee ] that you have installed in [ leg ] square feet?
You see it's looking difficult to say in terms of capacity because it depends on the product, one [indiscernible] one-side quoted or the two-side quoted, it all depend in the order. But very broadly, I can indicate it to you, the current capacity may have potential to generate between INR 100 crores to INR 125 crores in top line.
Okay. And can you -- so who are you going to [ catering to ] are you going to fed it directly to customer or with some -- are you having partnership with business? Is it B2B or B2C model?
So it will be -- to begin with, it will be largely B2B model. But finally, we are looking at B2C also. So we are selling more to the dealer distribution channels to begin with. And then once we have the complete product portfolio, we will launch a couple of the stores also for the direct service.
And can I get an idea about the margins that we'll be generating because now as your power focus would be on more on specialty side and this is the part of specialty tools?
So this is going to be a very high-margin product. Difficult on this especially to comment on a specific number with respect to the margin profile, but it's going to very high end in specialty in terms of the margins.
Which might come preliminary research. I understood that. This segment needs a specific dye, so it is a very rare technology. So how are you going to get this offering dyed back with whom are you going to have any technology or something? If you can elaborate on your dyeing technology.
Our R&D already got hold on the from the technology, [ on vector ] we need to commercialize that technology with respect to the dye expense. For the group spend already that is in process.
So you are saying that you have in-house developed 3 dyeing technology?
Ladies and gentlemen, that will be the last question for today's conference. I now hand the conference over to the management for closing comments. Over to you, sir.
So if I had to summarize, I think, very clearly, the quarter 1 FY '25 outlook for the BOPP margins remain steady, growing [indiscernible] in the March '24 month label. Further, as I said, we will be focusing more on the cost rationalization in FY '25 as well as high-end sale of the specialty funds.
The near-term outlook for the BOPET film is expected to remain challenging. However, we are going to focus more and more on this BOPP capacity, including high [indiscernible] among the new business verticals, Cosmo's specialty chemical, capacitor metallizer or engine packaging or should on decent EBITDA in FY '25, while Zigly may take some time to become profitable, however, it should be a significant than creator.
So with this note, I will repeat the [ statutory ] declaration. Certain statements in this call may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results. Now, many thanks for joining the call.
Thank you. On behalf of Cosmo First Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.